DTN Early Word Livestock Comments 05/19 06:19
Futures May Find Some Stability
Cattle and hog futures diverged Wednesday with hogs not succumbing to the
pressure on cattle and cattle not finding support from higher hogs. The concern
for cattle was that they were unable to rally even though corn futures suffered
substantial losses. Hogs found more cash and cutout support.
DTN Contributing Analyst
Cattle: Lower Futures: Mixed Live Equiv: $194.08 -$0.46*
Hogs: Steady Futures: Mixed Lean Equiv: $111.03 +$1.50**
*Based on formula estimating live cattle equivalent of gross packer revenue.
(The Live Cattle Equiv. Index has been updated to depict recent changes in live
cattle weights and grading percentages.)
** based on formula estimating lean hog equivalent of gross packer revenue
Cash cattle traded mostly steady Wednesday, which was not a surprise. The
surprise was that cattle could not find any support even though corn futures
fell significantly. Live cattle futures broke recent technical support while
feeder cattle made new contract lows. It may be tough to find traders willing
to buy into the market aggressively over the course of the next few weeks as
there are quite a few cattle expected to be available to the market. This,
along with the upcoming Cattle on Feed report to be released Friday, may leave
the market floundering. However, if the weakness remains into the report, we
could see a rebound in prices no matter what the report says as it may be
overdone to the downside. Estimates for the report are for on feed at 101.4%,
placements at 96.1% and marketings at 98%. Boxed beef prices were lower with
choice down $0.01 and select down $2.17.
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